Report No. 2010-123
October 2010
Complete Audit Report

Findings in the audit of the City of Marionville

Unsupported Transactions
This audit identified numerous unsupported and questionable transactions of at least $17,107. On June 25, 2009, the city learned the former City Clerk/Treasurer had not paid her sewer bill since 2004, and had cashed a $60 personal check from city cash receipts without later depositing the personal check. Unsupported payroll checks totaling $13,326 were written to, and prepared by, the former City Clerk/Treasurer from the city's general account. The former City Clerk/Treasurer entered incorrect usage information into the utility system and made unauthorized adjustments to her utility account to conceal the lack of payment of personal utility bills totaling $2,464. The former City Clerk/Treasurer wrote numerous personal checks to the city; and, subsequent to her termination, the city found 18 personal checks totaling $1,257, which were held and not deposited.

Oversight and Segregation of Duties
The Board of Aldermen has not established adequate segregation of duties or supervisory review over the city's various financial accounting functions. With the exception of the property tax function, the former City Clerk/ Treasurer was responsible for most record keeping duties of the city. Despite becoming aware in 2009 of numerous unsupported transactions and manipulation of city records involving the former City Clerk/Treasurer, the Board has not yet taken sufficient steps to properly segregate accounting duties. The lack of adequate controls and the absence of proper oversight by the Board allowed unsupported and unnecessary payments, manipulation of city records, noncompliance with city policy and state law, and other questionable transactions. There is little assurance city monies have been handled and accounted for properly.

Payroll Controls and Procedures
An adequate review of employee time records, computerized payroll reports, and payroll checks was apparently not performed by supervisors and the Board. The Board approved actions which are not in compliance with city personnel policies, and recently established leave balances may be incorrect. The former City Clerk/Treasurer failed to file federal payroll tax returns and deposit federal payroll taxes in a timely manner. As a result, penalties and interest totaling $28,957 were assessed and paid by the city. Two members of the Board of Aldermen elected to forgo the $60 per month salary authorized by city ordinance.

Utility System Controls and Procedures
Significant weaknesses were identified in control procedures related to the utility system. The city does not compare water usage reports provided by the local utility company to the amount of sewer usage billed each month, and as result, the city failed to detect that several customers were not billed for sewer services for significant periods of time. Numerous instances were identified where the former City Clerk/Treasurer did not properly bill customers and manipulated customer account status. These unbilled sewer services totaled $6,570. Delinquent sewer reports were not always prepared and provided to the Board of Aldermen for review. In addition, penalties are not assessed and sewer service is not always shut off in accordance with city ordinances. The official responsible for all utility billing, receipting, and recording functions, has the ability to post adjustments to the computer system without obtaining independent approval. The city does not perform monthly reconciliations of total amounts billed, payments received, and amounts unpaid for utility services including sewer and trash. The city does not properly account for refundable sewer deposits. The city has not performed a review of trash rates for several years, and a sewer rate increase was based on questionable collections data.

Property Tax System Controls and Procedures
Monthly and annual reports were not prepared and presented to the Board of Aldermen summarizing the amount of property taxes collected as well as those which remain delinquent. An account book to record property tax charges, collections, and remaining delinquent taxes is not maintained by the City Clerk/Treasurer. The City Collector makes all changes to the tax book without review or approval of the Board or City Clerk/Treasurer. A list of delinquent taxes is not prepared and approved by the Board of Aldermen. The city does not adequately monitor or pursue collection of delinquent taxes, and penalties are not always charged on delinquent taxes paid. The Board of Aldermen waived 5 years of property taxes and penalties for a city resident in violation of state law.

Accounting Controls and Procedures
Procedures for receipting and securing monies are not adequate and reconciliations of receipts to deposits are not performed. Twenty-two checks totaling $2,740 received by the city from various residents or companies were found at city hall after the former City Clerk/Treasurer's termination. The checks had not been posted or deposited. City receipts are typically not deposited timely and intact and are not always posted to the computerized accounting system timely. The city does not adequately follow up on outstanding checks and numerous un-negotiated checks, made payable to various vendors were found at city hall after the former City Clerk/Treasurer's termination.

Other findings in the audit report relate to disbursements, restricted receipts, financial statements and budgets, meeting minutes and ordinances, and capital asset procedures.

Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov